South Korea in the Fast Lane: Economic Development and Capital Formation

Young-Iob Chung

Abstract

This book examines South Korea's robust economic development and rapid capital formation, which has transformed the country from an agrarian/semi-industrial economy facing seemingly insurmountable obstacles and naysayers at the end of World War II into one of the twelve largest industrialized economies in the global market by the end of the 20th century. After evaluating economic development, this book assesses sectoral investments, both in the public and business sectors, focusing on their volume, nature, sources, and means of financing investment at home and abroad. The domestic sources for ... More

This book examines South Korea's robust economic development and rapid capital formation, which has transformed the country from an agrarian/semi-industrial economy facing seemingly insurmountable obstacles and naysayers at the end of World War II into one of the twelve largest industrialized economies in the global market by the end of the 20th century. After evaluating economic development, this book assesses sectoral investments, both in the public and business sectors, focusing on their volume, nature, sources, and means of financing investment at home and abroad. The domestic sources for savings in the private sectors, which constituted four-fifths of savings, are traced to the business and personal/household sectors, while those in the public sector are tracked mostly to household and foreign sectors in the form of loans and aid, especially from the United States and Japan. The book also examines the sources and magnitude of high business savings that are traced to large profits, which are mainly attributable to generous government bounties, subsidies, and inflation windfalls. Investment in human capital by both the public and private sectors is also investigated. The role and the contribution of government in all aspects of South Korea's success in capital formation and economic development, especially in promoting the import-substitution and export industries, are considered. The book also discusses the sources of foreign savings, which played the crucial role in capital formation and economic development in the early years after the Korean War.

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